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Tax planning for small business owners

Posted in: Business Management by Susan Low | No Comments Tuesday, August 31, 2010

Further to my earlier post about doing it yourself, I started delving a bit into tax planning. I have a humdinger of a corporate tax bill coming up (the price of success) and was wondering if I could reduce that by declaring a bonus for myself and paying it out as regular employment income. I wanted to see what the overall effect of that would be on my total tax situation.

The Canadian Tax Calculator was a very useful tool for me to model different personal tax scenarios for myself. I tested out the difference between paying dividends and paying a bonus, adding it to the employment income I make from teaching at Camosun College. In addition, I calculated roughly what my tax bill would be inside the company if I paid out a bonus to reduce the corporation’s year-end profit, factoring in the employer’s share of EI and CPP. Then I looked at the difference between the scenarios, in terms of how much total moolah was being paid in income tax, and assessed my cash flow situation to determine whether my company could weather the strain of one big whopping tax bill, or a series of smaller payments in the last 4 months of the year.

The actual numbers are not the point of this… I’m not going to tell you what’s working for me, because that might be construed as tax advice and I am completely unqualified to do that. I just wanted to tell you about that super-handy link, and also demonstrate that when it comes to tax planning, there is SO much to take into consideration. I’m pretty ballsy when it comes to making assumptions that I know enough about taxes to do this math for myself. Your mileage may vary!

I haven’t yet begun actually doing my corporate taxes, but since I use Quickbooks and have it set up with each account mapping to a tax line (that’s a function in Quickbooks’ account setup form), I suspect it will not be hugely difficult. I have done corporate income taxes once before and with a program like Quicktax for Business, it’s not that much of a headache. Also, the marginal savings in taxes do not make up for the accountants’ fees. When ya make money, ya gotta pay a foundational level of tax. That’s all there is to it. If I wanted to be tax-free I’d go live in the Caymans.

Hmm. There’s an idea.

Don’t just think or decide: take action!

Posted in: Commentary by Susan Low | No Comments Monday, August 30, 2010

Is “do it yourself” really a good business choice?

Posted in: Commentary by Susan Low | No Comments Tuesday, August 24, 2010

Today has not been a stellar day for my business. My kid was sick so I spent most of the day at home, trying to focus on my laptop while Disney movies played at top volume 5 feet away (the kid is 3 – when he’s sick, Mommy has to be there). In the afternoon I had 30 minutes at my office to pack my kit and supplies for a two-day facilitation event in Surrey, and despite my best efforts to stay calm and orderly, I managed to leave behind my box of markers, tape, and other graphic facilitation doo-dads.

While I’ve managed to recover the situation with a quick stop at Staples, it made me think again about my plan to make myself a carrying bag which will accommodate two rolls of chart paper and my kit of markers etc., to make commuting to facilitation gigs easier and faster. I’m lucky to be good with my sewing machine, so I’m more inclined to puzzle my way through making such an item rather than buying one from off the Internet.

That led me to thinking about my habit of insisting on doing things myself, despite the fact there are usually vendors out there willing to take tasks off my hands for a fee. My website, for example, is the product of uncounted hours of clambering up the WordPress learning curve. This year I’m probably going to do my own taxes because paying the going rate for my accountant to do my year-end seems like a serious waste of money, for a one-person company. But where should I – or other business owners – draw the line when it comes to “do it yourself?”

This is a particularly relevant question considering I’m the pioneer of “Do It Yourself Strategic Planning” for my clients. Do I really mean that people should take their strategic planning into their own hands instead of hiring a consultant? Yes. Yes, I really do. Especially when you have a small business, like one or two people. Strategic planning is a discipline which can be explored from many starting points; you don’t have to be an expert, and in fact I defy anyone to prove they really are an “expert” at strategic planning. I have expertise in organizing and analyzing the process, but strategic planning is like golf – you’re always striving for the perfect game and if you ever actually play it, well you might as well just curl up and die. It helps to know a bit about SWOT analysis and industry analysis and competitive positioning, but that stuff is like icing on the cake of deep, abiding understanding of your work and your industry.

But when it comes to other things, like website design or bookkeeping, there are strong arguments for outsourcing instead of burning the midnight oil trying to do everything for your business. For me the distinction comes from enjoyment: I honestly did enjoy doing all that crazy stuff for this website, and I also enjoy my bookkeeping because it’s simple, light and keeps me in touch with my business cash flow. I also enjoy sewing things for myself because I have the ability and the tools. I don’t really enjoy taxes, but I do enjoy having an extra $grand or more in my pocket. The taxes is the one thing that holds a question mark for me – maybe I really should just suck-it-up and hire the accountant.

Where is your line for “do it yourself?” What do you do for your small business that others often outsource, but you consider part of your role? Do you do it because it’s fun, or because (as I say about myself) you’re too cheap to hire somebody else, and don’t want to be bothered to explain how you want it?

Website & Social Media Integration

Posted in: Tech Talk by Susan Low | No Comments Monday, August 9, 2010

This is a sequel to my post announcing the launch of the new Directis.ca.

No wonder people think social media is too confusing. To do it well, really well, in a way that actually supports positive results for your business, is complex and a bit exhausting. I say this after spending the past three-four days preparing this website and (today) trying to get as many social media integration tools as I can set up to maximize my leverage from the site.

Here’s a list (as far as I can remember) of all the ways this website is, or will be, integrated into social media: read more…

Unleashing the new Directis.ca

Posted in: Tech Talk by Susan Low | No Comments Monday, August 9, 2010

This weekend I have lived the programmer lifestyle: alongside planning and running my son’s 3rd birthday party, I’ve completely redone my company website. It wasn’t quite as easy as picking a new WordPress theme and installing it, though. Oh no. I picked a custom professional theme, but then implementing it brought me into the world of custom post types, custom page templates, custom menus, shortcodes, plugins, widget logic… OH MY HEAVENS. I figure I’ve put in about 24 hours of time working on the website, and it’s still not perfect the way I want it. But it’s close.

A short laundry list of the things I’ve been working through:

  • Set up Advanced Events Registration plugin, and then hacked it like crazy to make it Canadian (it was all states and zipcodes) and include an attendee’s company name in their registration. Sure I could have paid for the pro version, but still had no reassurance it would do what I wanted, so I just dove into the code and rewrote the event registration form, the way it listed attendees, the way it presented a list of events in a category. Still to do: change how it shows upcoming events in the sidebar widget.
  • Created various custom post types to try to get testimonials and featured projects to show the way I want them to.
  • Re-installed Download Manager to handle my premium content (easy!)
  • Installed Pie-Register and configured it to accept more fields on the user registration form.
  • Changed my newsletter hosting over to MailChimp because of the availability of scripts to automate subscriptions
  • Moved this whole site from the working directory where I was testing and working all weekend, to the main directis.ca site where you see it now. Boy was that nervewracking!

There is much more I want to do with the site, and tell you about in terms of why I’ve done all these changes and what’s coming in the future. However it’s now 11pm and I have to rise at 5am for rowing practice tomorrow.

DIY Strategic Planning – feedback & some ideas

Posted in: Commentary by Susan Low | No Comments Tuesday, June 29, 2010

Last week’s DIY Strategic Planning seminar went pretty well, if I dare say so myself. I modified the content from the first session (April 22) to focus more specifically on what goes into a strategic plan, and less about how to facilitate the process. The DIY Marketing Plan template was part of the presentation this time, and I also discussed what goes into a good SWOT Analysis.

One of the attendees, Vyvyan Rousseaux, wrote a lovely email to me and encouraged me to share it:

Thank you so very much for the excellent seminar today.  You presented your material in a lively, and interesting format.  I especially liked the white board exercises.  Power Point is fine, but everybody does that. I like the ‘on the blackboard, kids’ approach.  Watch the teacher.  Probably a generational ‘thing’.

Ohmigosh, no wonder so few businesses survive to the 3 year mark.  How many people know all this info that you taught us today.  How many people would carry through and do it, even though not to do it means ‘down the tube’.

I went into your seminar not knowing what to expect, and I came away thinking, “That was the best $35.00 I ever invested”.

I’ve started a Meetup Group for people who have attended (or want to attend) a DIY Strategic Planning seminar. Head on over and join up!

Today I’d just like to say I’m incredibly grateful for Michael Port, author of Book Yourself Solid. His book was a little hard to get through, as it was choc-a-block with ideas that really forced me to rethink marketing, and I felt panicked that I couldn’t implement all those ideas at once. Over the past year and a half I’ve been receiving his email newsletters and recently they have been particularly useful. He’s getting good at putting very relevant, actionable suggestions into his newsletter. Every month I add another idea or two into my marketing strategy, shaped around my own personal strengths. If you’re building a professional services practice, then you really need to be familiar with Michael Port’s stuff, and working on how to use some of his ideas in your own way.

Quick HR alert – don't ask job candidates for a current employer reference

Posted in: Business Management by Susan Low | 1 Comment Monday, June 14, 2010

A friend of mine is idly looking at new job opportunities, and drew my attention to a posting which included a requirement I haven’t seen before: when asking for references, it specified that one reference must be from a current manager or supervisor. There are two major flaws in this requirement, and both of them could get an employer into trouble:

1. This is discriminatory. It limits job eligibility to those who are currently employed, which is not a bona fide requirement for the role. There are many people who could be perfectly qualified for the position but, for one reason or another, not have a supervisor they can ask; more likely, a good candidate might be out of a job due to being on parental leave, having had an injury which put them onto disability, having quit a previous job due to a toxic environment. There’s an underlying assumption, with this requirement, that anybody worth employing for this job is already employed by somebody else. This is, in a nutshell, discrimination on the grounds of employment status.

2. In order to get a reference from a current manager, two conditions need to be met: a) your current manager has to like you enough to give you one despite the fact that you’re planning to leave them; and b) you have to be willing to jump ship from an employer which likes you enough to give you a reference. Either way, it’s kind of like looking for a new spouse among adulterers – chances are, you’re going to be cheated on too. Do you really want to hire a person who’s willing to jump ship from a happy place? What sort of corporate culture does that imply?

If you manage to get good, qualified job candidates in response to your posting, asking them to provide recent references (i.e., relating to their work in the past two years) is useful information. Expecting somebody to produce a reference from their current employer is going to limit your choice of candidates unnecessarily, and possibly lead to some trouble.

Planning for graphic recording for NEED

Posted in: Graphic Facilitation by Susan Low | 4 Comments Monday, June 7, 2010

I’m going to be doing graphic recording for a Youth Suicide Prevention Community Forum, put on by NEED Crisis Line and UVic’s School of Child and Youth Care tonight. I thought I’d share my preparation process as a blog post, and then I can share the post-event process and the images. Doing this blog post gives you an idea of what I do for community forums like this, and helps me form a journal of my work. read more…

What would be better than the HST?

Posted in: Current Events by Susan Low | No Comments Tuesday, May 18, 2010

Having read a great deal of information about the HST, I have come to the conclusion that it is not a good idea, period-full-stop. Here are my primary reasons:

1) Lying to the populace is not acceptable for a government. The Liberals said in their election campaign that they were not going to bring in the HST. Soon after they were elected, they brought it in. Either they were stupid and naive to think it wasn’t going to become an issue in BC, or they think we are stupid and naive enough to believe their claim. Maybe both. Either way, this is not the first time the Liberals have gone back on an election promise (remember when they said they weren’t interested in privatizing BC Rail? Oh yeah) and it is up to the populace to send a clear message that we do not accept this behaviour. What better way than to sink the sacred ship?

2) The HST introduces taxes on a bunch of stuff that wasn’t taxed before, which raises cost of living for consumers. Our economy, whether Gordon Campbell likes it or not, actually depends on consumers buying stuff. Things like houses, massage services, consulting services, etc. which were not taxed provincially under the PST and now are. There’s about 100 things being taxed now that weren’t taxed before, provincially.

3) Despite increasing tax on certain items, BC will actually lose money on this tax shift. Estimates of the total amount vary, but essentially the “tax revenue + federal bonus – rebates – HST credits” received in BC’s treasury will net less than what the treasury would receive under the existing tax scenario. Where’s the brains in that, in a time when our treasury is already taking hits, and cutbacks are rife?

Here’s what Gordo and his pal Colin should have done instead:

1) Announce the PST will be ditching its current antiquated system of collection, remittance and commission, and switching to the same model that is used by GST: Collect tax, track input tax credits, and remit the difference. No commission to collect. Businesses would still benefit from the input tax credits on the PST, which is the really big economic bonus of this tax. Businesses won’t have to deal with a complicated remittance system, which will streamline operations and probably make more businesses likely to collect and remit PST thoroughly.

2) Anything with PST on it right now keeps the PST, at the same rates as before.

Bingo – it’s a zero-sum game for consumers, and businesses get the economic boost that Gordo so dearly loves. Our treasury reaps slightly less tax revenue at first, with reduction in the amount of bureaucrats needed to babysit the PST system because it’s SIMPLE now. The economy can grow, create jobs etc. and replace the tax revenue lost from input PST credits with income taxes instead. (If we could afford to do input tax credits through HST, we can afford it through PST).

Incidentally, the petition in support of the HST Extinguishment Act is doing quite well.  As of May 9, 69 out of 85 ridings had achieved the 10% of registered voters signature required by Elections BC. I was curious about those ridings who have not passed the mark, and so I did some number crunching and comparisons. I looked at all the ridings and compared the results on the petition with what party MLA sits in the riding, and where the Liberal cabinet members sit. The results are shown here: http://ow.ly/i/1D48 (feel free to retweet).

It’s mostly urban centres which haven’t passed the 10% mark, and the skuttlebutt is that urban centres started collecting signatures about a week after rural centres. There doesn’t seem to be a big difference in what party MLA is sitting in the riding – among urban centres NOT passing the 10% mark, it’s about an even split between Libs and NDPs. So it looks like it’s just about the petition organizers in those ridings needing a little longer to get organized and get out the votes. Gordo’s riding, by the way, hasn’t passed the mark, but it is not among the slowest. Given that it’s in Point Grey and most people are probably working fulltime outside the riding, I’d expect it’s difficult to find people and get them to sign. Tomorrow, I’ll run the numbers and make a chart showing the performance of urban vs suburban vs rural ridings.

Working ON my business

Posted in: Commentary by Susan Low | 2 Comments Monday, May 3, 2010

Things have been slow around here since the end of the government fiscal, so what better time to step back and do some of that “working ON the business?”
read more…

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